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Kilroy Realty Corporation (NYSE: KRC) today announced that it has closed on the purchase of Westlake Terry, a two building 320,399 square-foot, Class A office property in the high growth Seattle submarket of South Lake Union for approximately $170 million. The LEED Gold certified property was built in 2007 and occupies a full city block at 320 Westlake Avenue North and 321 Terry Avenue North. The property is ideally located on one of Seattle's main mass transit arterials, Westlake Avenue, as well as directly adjacent to the South Lake Union Transit Line.
Westlake Terry is currently 100% leased to a diverse tenant base that includes Group Health Cooperative and Microsoft Corporation, which collectively account for more than 85% of the property.
“Westlake Terry encompasses all the compelling characteristics that we seek to include in our portfolio – strong submarket fundamentals, adjacency to transportation and abundant amenities as well as proximity to an anchor corporate user,” said John Kilroy, Jr., the company’s president and chief executive officer. “In today’s environment where core pricing has been extremely aggressive, it is our platform and franchise that have provided us with a competitive advantage to allow us to unlock the value of this acquisition and achieve an in-place cap rate in the mid 6% range on a fully-leased premier asset.”
“We expect South Lake Union to continue to be a vibrant, highly desirable market that offers all the amenities and a quality of lifestyle that tenants seek, evidenced by the growing corporate user base in the market,” said Mike Shields, senior vice president of KRC’s Pacific Northwest region. KRC now owns approximately 2.1 million square feet of premier office space in the Puget Sound Region, including the Eastside submarkets of Bellevue, Kirkland and Redmond and the Lake Union submarket in Seattle. The Pacific Northwest portfolio represents approximately 13% of KRC’s overall annual net operating income on a pro forma basis.